2 Democrats Knock Bush Policies

Rep. Richard A. Gephardt on Tuesday assailed President Bush’s energy policy, saying it has undermined the fight against terrorism, while Sen. John Edwards proposed a series of tax breaks to help middle-class families accumulate wealth.

The two Democratic presidential hopefuls broadened their platforms in separate policy speeches.

Campaigning in California’s Silicon Valley, Gephardt said the country’s dependence on foreign oil not only has hurt the economy and degraded the environment, but also helped underwrite terrorists linked to Saudi Arabia, the largest supplier of oil to the United States.

In a speech bristling with harsh rhetoric, Gephardt of Missouri said, “Oil profits from Saudi oil families literally helped to fund the ungodly attacks on Sept. 11. Is that where we want to send our hard-earned cash?”

Edwards expanded on a central theme of his campaign, saying Bush’s tax agenda favored Americans who derive income from investments over the vast majority who primarily support their families through wages.

He said he would seek the repeal of a series of tax cuts for upper-income earners -- particularly the recent measure that reduced taxes on dividends and capital gains -- to fund tax breaks designed to help boost the financial assets of middle-class families.

“I believe America should value work,” the North Carolina senator said in a speech at Georgetown University. “[Bush] values wealth.”

The two candidates laid out their policies as a handful of rivals in the nine-person Democratic field courted party moderates at a meeting in Washington of the New Democratic Network.

In the most substantive remarks at that gathering, Sen. Joseph I. Lieberman of Connecticut said that as president he would work to reduce the poverty rate by a third during the next decade by increasing the minimum wage, enlarging the tax credit for working-poor families, increasing access to child care and expanding Individual Development Accounts, under which the government matches savings for low-income families.

“The scandal of poverty ... must now be met with the full strength of our moral authority, our material wealth and our creative ideas,” Lieberman said.

Gephardt offered his energy plan in a speech in Sunnyvale before an audience of high-tech executives. He called for a combination of tax incentives and increased research funding to help end the nation’s “crippling dependence on Saudi and Persian Gulf oil.”

The goal, Gephardt said, is to see that 10% of the nation’s energy supply comes from renewable and alternative sources within a decade, a figure that ideally would increase to 20% within 20 years.

He praised the administration’s decision to begin withdrawing U.S. troops from Saudi Arabia. Still, he said, U.S. policy “remains shackled” to Saudi oil producers, which he said explains why “this administration never spoke out about the clear evidence that Saudi citizens were funding Al Qaeda” terrorists.

“It’s time we stopped behaving like the United States of Saudi Arabia and started working toward total economic freedom from Saudi Arabia, from the oil it exports and from the radical fundamentalism it’s visited on the world,” Gephardt said

A spokesman for the Saudi embassy in Washington rejected Gephardt’s assertions, saying the country “has become a punching bag for anyone who seeks political office.”

The speech opened a new policy front in Gephardt’s campaign, which has been centered on bread-and-butter economic issues, particularly access to health care. A spokesman for Gephardt put the cost of his energy plan at roughly $200 billion over 10 years, which would be financed by projected growth resulting from his economic and health-care initiatives.

Notably, Gephardt did not propose to increase automobile fuel-economy standards, a move favored by environmentalists but opposed by organized labor groups close to his campaign.

Among the leading Democratic candidates, Lieberman, Sen. John F. Kerry of Massachusetts and former Vermont Gov. Howard Dean have endorsed significant increases in the standards. But Gephardt has said he would support higher efficiency standards only as part of a comprehensive plan that would include tax breaks and other incentives to create a bigger market for such autos.

Edwards’ tax plan reinforced what has emerged as the core message of his candidacy: that he will defend the interests of working families against an administration he charges tilts toward the rich.

In broad terms, Edwards proposed to repeal most of the Bush tax cuts benefiting the wealthiest Americans, using the money to fund a series of tax breaks that would help middle-class families amass wealth -- by purchasing a home, buying stock or saving for retirement.

“Instead of helping wealthy people protect their wealth, we should help working people build their wealth,” Edwards said. Edwards became the first Democratic contender to respond to the growing belief in the party that Bush’s long-term economic strategy is to shift the burden of taxation away from income derived from investments -- such as dividends or stock sales -- toward income derived from wages. Bush recently signed into law a bill that slashed the tax rate on income from dividends and long-term capital gains to 15% from 38.6% and 20%, respectively.

Bush and other Republicans argue that such tax breaks will spur investment and enlarge the economy. But Edwards said such efforts will inevitably “heap more and more of the [tax] burden on people who work.”

At the same time, Edwards argued that it was unfair for wealthy investors to pay only a 15% tax rate on income from capital gains or dividends while many middle-class workers face a combined income and Social Security tax rate of more than 30% on their wages.

“Ordinary Americans shouldn’t pay higher taxes on the work they do than the most fortunate pay on the wealth they own,” Edwards said.

He proposed returning the tax rates for earners in the top two income brackets to 39.6% and 36%, respectively -- the levels they were when President Clinton left office. Under Bush’s latest tax cuts, those rates fell to 35% and 33%, respectively. The changes would affect families whose annual taxable income exceeds about $180,000.

Edwards also would scale back the reduction in inheritance taxes Bush won in 2001. And he would repeal the Bush tax breaks on dividend and capital gains income for families in those top two brackets, while maintaining the new 15% tax rate on both for middle-income taxpayers in the lower three brackets.

With the roughly $300 billion Edwards expects to recoup by imposing those higher tax rates on investments, he would create a series of tax breaks limited solely to the middle class. Key among them:

* A tax credit of up to $5,000 for a first-time home buyer;

* An exclusion from taxation for the first $1,000 in capital gains;

* A federal grant that would match up to $1,000 annually in contributions workers make to retirement savings accounts.

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Barabak reported from San Francisco, Brownstein from Washington.